Primadelis Beginnings And Its Success Story Marketing Essay

2762 words (11 pages) Essay

1st Jan 1970 Marketing Reference this

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The objective of this report is to discover about the starts of the well-known PrimaDeli that we all know. We’ll also be touching slightly on how Prima Limited was first established, the challenges it faced and obstacles it went through as a company before eventually making it big in the industry. And most importantly, how did it manage to make a breakthrough even after the undesirable food-poisoning incident.

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What is Prima Deli?

PrimaDeli is a well known pastry shop filled with different types of delicacies. From puffs to cakes other variety of confectionaries to satisfy your cravings. Over the years, they have grown rapidly all over Singapore and providing good quality service to satisfy their customers. With the outlets being conveniently located in major residential estates, commercial districts and shopping areas and more than 30 outlets across Singapore, it’s no wonder their bakeries are recognised all over the island.

Corporate History

In 1961, Prima Limited was established when its founder, Cheng Tsang Man, built Southeast Asia’s first flour mill and the company. Prima was also known as “Bai Ling Mai”, which means ‘a hundred year old wheat’ in Chinese. It is to represent the company’s vision for corporate longevity. The company made the official listing under both Singapore and Malaysia business registries in 1969. The company not only has flourmill in Singapore but also in other countries like Indonesia, India, the Philippines and Australia. The Prima we know today is more than just involving into flour milling, it is now diversifying into other aspects such as signature restaurants, food manufacturing, baked confectionary products, even in property management and fields of information technology. And PrimaDeli is one of the successful businesses that the company has now. Launched in 1992, PrimaDeli is Singapore’s first one and only home-grown bakery franchise and also the longest-running Singapore food franchise. With the bakery outlets located in major business, residential and shopping areas, drawing a diverse mix of culture and races to their choice bakery products. PrimaDeli has been managed by the Prima Food Pte Ltd, which is the subsidiary of food and service conglomerate Prima Limited.

Setbacks faced by Prima in the early years

Just coming into its first few years of operation, the company was already confronted with umpteen financial setbacks which include the struggle of regulating the continual fluctuations uh their profit margins. In their yearly report for 1970, Prima addressed the problem of rapid increase of production costs particularly the vital raw products of wheat grain and also for the logistics of freight transportation costs. Due to the hike of price in production costs, the company had no other choice but to sell their goods and their by-products at higher cost in order to restore their lost and to ensure that their profit margin is maintained.

What was done to counter back the problem

Due to their concern over production costs, Prima subsequently felt encouraged to purchase majority share-holds in multiple primary industries and firms. The company took a majority stake in Prima Modern Machinery Pte Ltd in 1990 and took over the businesses of Goodman Fielder Wattie (Asia) Pte Ltd, a company that specialises in food and beverage area. These achievements have allowed Prima to widen their portfolio of long-term investment and consequently contributed to the cutback of production costs induced by the company.

To further counteract the extreme price increase in market productions, Prima began specializing in export sales within the year itself. These measures paid off munificently allowing the company to restore its lost and claiming a profit of up to S$2.736 million for 1991 as to comparison to the loss attained in the previous year that came up to S$5.124 million.

Achievements

Over the years, Prima Limited had successfully grabbed a few awards to bring up its name. Some of these awards are Hazard Analysis Critical Control Point (HACCP) and Singapore Franchise Mark.

HACCP which is the Hazard Analysis Critical Control Point is a systematic and scientific approach in indentifying, processing, production and preparation of food so as to ensure that the food is safe when consumed.

By attaining the HACCP award, it shows that Prima Food has a system which is universally recognised. This is especially helpful in allowing PrimaDeli to compete more effectively in the world market and it also open potential markets by increasing confidence in Prima’s food safety and hygiene standards.

With the Singapore Franchise Mark award in hand, it goes to show that Prima is certified for having creditable professional standards in the sectors of business practices, management capabilities as well as business performance. This certainly puts Prima in a advantageous position because on the few top selected companies are rewarded with this award. By being listed as one of the companies, it just goes to show that Prima is one of the few top notch companies in terms of franchising management. Currently, all PrimaDeli retail outlets operate under the franchise system. What this system does is providing franchisees with premium quality products as well as a broad scope of professional training and help that includes outlet concept development and marketing. With this, the system allows for the franchisor to focus on food manufacturing, research and development while partnering like-minded entrepreneurs to operate the retail front. In which, it assures a steady business growth. PrimaDeli has also received awards including Franchise Excellence Awards Mark in recognition for its successful franchise system.

In 2002, Prima Limited picked up the Superbrand status in a celebration of its corporate longevity and significant contribution to the Singapore economy. This was followed by the 2004 SPBA Heritage Brand Award which recognises the company’s market excellence over 40 years. By attaining this award, PrimaDeli is recognised to be one of the top brands in Singapore for market dominance, goodwill, customer loyalty and overall market acceptance.

Recent years

In 17 may 2007, PrimaDeli being the first home-grown bakery franchise and the longest running Singapore food franchise, has received the Halal food certification from MUIS, the Islamic Religious Council of Singapore – a first for an established Singapore bakery franchise. It is after 15 years, that PrimaDeli finally decided it’s time to tap into the halal market and increase its customer base. With the Halal certification, PrimaDeli is now able extend its wide range of freshly-baked

pastries, buns, breads and premium quality cakes to the Muslim community at 38 retail outlets islandwide. The Halal certification provides assurance to the Muslim community that the food does not contain any ingredients which they are forbidden to consume, such as alcohol, pork and other meat that have not been prepared according to Islamic rituals. With the Halal certificate in hand, has certainly put PrimaDeli in an advantageous position.

Unfortunately, on 19 November of the same year, Prima Limited was confronted with one of its biggest challenges to date. Which is a virulent case of salmonella poisoning that caused all 38 Prima Deli outlets to be closed for a period of up to 3 weeks. The company was fined the maximum of S$5000 for selling contaminated food and for causing more than 200 of its customers to fall ill after consuming cakes purchased from Prima Deli stores. Sales drastically dropped to 15% in the immediate aftermath of the health scare, but were declared to be not as dire as the company had estimated. As a matter of fact, customers eventually returned back to the stores, and the company’s overall sales actually rose 10% to 15% higher than their usual records during previous business years. Many new rules and regulations were implemented as a direct result of this case of salmonella poisoning, with all employees now required to undergo not just routine health checks, but also screening for salmonella. The company also implanted more cameras in production areas in order to monitor hygiene more effectively.

Company’s subsidiaries

After looking at the organization’s history and the numerous challenges that it faced, let’s now look at how the company diversifies its services, not just in terms of producing quality baked products but also in cafeteria operations, fine dining and casual dining. Apart from food beverages, Prima is also into the field of information technology to further increase their profits and make use of it to full benefit.

In this section, a list of subsidiaries will be given just to show how Prima Limited has succeeded in expanding their company.

List of subsidiaries under Prima Limited

Prima Food Pte Ltd

-PrimaDeli Asia (M) Sdn Bhd

-Confectionery Transformation (M) Sdn Bhd

– PrimaDeli Franchise (M) Sdn Bhd

PFS Pte Ltd

– Prima Noodle Restaurant Pte Ltd

PrimaDeli’s Vision and Mission

The following was extracted from http://www.prima.com.sg/core_biz/Frameset/index_foodsvs_manu.htm

http://infopedia.nl.sg/articles/SIP_1458_2009-02-11.html

Prima is also known as “Bai Ling Mai” in Chinese, which means “a hundred year old wheat”. It is used to represent the company’s vision of corporate longevity.

‘PrimaDeli is Singapore’s first homegrown bakery and confectionery franchise. It was launched in 1992 with the mission to transform the local bakery and confectionery industry by adopting modern production and management techniques, information technology and strong branding.’

From here, it can be seen that PrimaDeli is living up to its vision of longevity of the company by inducing new ways to prosper their business live attaining a Halal certificate so as to broaden their range of customer in terms of race. Also they are always coming up with different ways to further improve their baking solutions through technology.

An In-Depth Look

External environment of the company

Here we’re going to look at the competition that PrimaDeli faces against other confectionary shops. The figure below shows which 2 confectionaries customers prefer to than PrimaDeli. These percentages were base on a survey which I have done.

Confectionary shop: Percentage (%)

Polar puffs & cakes 81.8

Bengawan Solo 4.5

Breadtalk 31.8

From here, it could be seen that clearly there’s a huge percentage of people which will turn to Polar puffs & cakes other than PrimaDeli. There’s a very fierce competition going on between these two popular shops.

Let’s now look at what consumer’s feel PrimaDeli should improve on. Again these figures are base on the response I’ve gotten from my survey.

Percentage(%)

More variety in choice of pastries, puffs, cakes, etc

60

Reduction in price

10

Customer service

20

Cleanliness

10

This clearly shows that customers want PrimaDeli to provide more variety of their pastries because they want to see something new, innovative and capture their eyes and taste.

Task Environmental Analysis

Threat of new entrants is High

There are more and more confectionaries sprouting

They are mostly located in heartlandsHaving analyzed the potential external threats, it is time to look at the factors directly contributing to a tight competition among confectionaries in Singapore a Porter’s Five diagram.

Bargaining power of buyers is High

There’s a vast choice of confectionaries to choose from

So, consumer will choose the ones that are cheap & has a wide variety of pastries

The consumers are the ones that will decide which bakery is the best

Supplier Power is average

Different confectionaries has different suppliers

The quality of products depends on the suppliers

There are still a wide range of suppliers to choose from

Rivalry is Intense

Number of confectionaries in Singapore is high

There is an increasing number of pastry shops coming up with new ways to attract consumer’s attraction ;promotions

Product and Technology Development is medium

With the constant upgrade of technology, some confectionaries are using this to their benefit

This aspect can be used to improve in their food quality

Internal Environment

Management

Here I’m going to do a marketing mix to compare both PrimaDeli and Polar.

PrimaDeli

Product

The main product for PrimaDeli is a range of top quality pastries, buns, breads and cakes.

Price

The range of prices varies depends on the type of confectionary that you’re buying.

For cakes it starts from $15 and can reach up to $45++ according to the flavour and weight of cake.

Outlets

Up to date there are 38 outlets in Singapore

Polar

Product

They specialises in mostly puffs and cakes

Price

Pricing varies to the products bought

Cakes starts from $10.80 – $45++

Outlets

As of now, there are 33 outlets and 70 takeaway counters at petrol stations

Observations and Conclusions

Critical success factors

To determine the critical success factors of PrimaDeli we’ll have to once again look at PrimaDeli’s mission.

Mission

To transform the local bakery and confectionery industry by adopting modern production and management techniques, information technology and strong branding

Critical success factors

They should put in place their management techniques by producing and thinking of ways to further improve on their variety of confectionaries

In order to have a strong branding, they should think of new modern production ways to market their products

They should also keep up with the market competition and open up more outlets

Strategic problem

PrimaDeli should start considering in increasing the variation of their pastries because with more pastry shops coming up, they will lose out if they don’t change their strategies in pulling in more customers. Also, they will need to have more outlets in order to compete with the various confectionaries out there.

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Strategic Alternatives and Recommendations

PrimaDeli has been doing really well in terms of their diversification in other aspects other than just in selling pastries, like franchising into other countries. However, in the area of marketing of their confectionaries here, they are a bit lacking in putting in more concern.

They should come out with different strategies and market plans to pull in customers to boost their income. Although being the first home-grown bakery franchise and the longest running Singapore food franchise, they still have a chance to lose their customers to other shops. For example, Polar puffs & cakes. Polar is now gaining a lot of attention and popularity from consumers because they feel that there are more varieties there rather than in PrimaDeli. With the numerous promotions that Polar has and also considering the number outlets it has as compared to PrimaDeli, it’s only a matter of time before PrimaDeli will lose out their customers.

Conclusion

In all, PrimaDeli has done Singapore proud by being one of the longest running Singapore food franchise and also first home-grown bakery franchise. It has venture out into other countries and gained the trust of other companies to purchase and use their products. This is something that not many local companies have been able to done. PrimaDeli also have proven that their standards are recognised world-wide and so are their food beverages.

However, PrimaDeli just have to step it up and be in pace with the current market. This is to ensure that they won’t fall behind.

The objective of this report is to discover about the starts of the well-known PrimaDeli that we all know. We’ll also be touching slightly on how Prima Limited was first established, the challenges it faced and obstacles it went through as a company before eventually making it big in the industry. And most importantly, how did it manage to make a breakthrough even after the undesirable food-poisoning incident.

What is Prima Deli?

PrimaDeli is a well known pastry shop filled with different types of delicacies. From puffs to cakes other variety of confectionaries to satisfy your cravings. Over the years, they have grown rapidly all over Singapore and providing good quality service to satisfy their customers. With the outlets being conveniently located in major residential estates, commercial districts and shopping areas and more than 30 outlets across Singapore, it’s no wonder their bakeries are recognised all over the island.

Corporate History

In 1961, Prima Limited was established when its founder, Cheng Tsang Man, built Southeast Asia’s first flour mill and the company. Prima was also known as “Bai Ling Mai”, which means ‘a hundred year old wheat’ in Chinese. It is to represent the company’s vision for corporate longevity. The company made the official listing under both Singapore and Malaysia business registries in 1969. The company not only has flourmill in Singapore but also in other countries like Indonesia, India, the Philippines and Australia. The Prima we know today is more than just involving into flour milling, it is now diversifying into other aspects such as signature restaurants, food manufacturing, baked confectionary products, even in property management and fields of information technology. And PrimaDeli is one of the successful businesses that the company has now. Launched in 1992, PrimaDeli is Singapore’s first one and only home-grown bakery franchise and also the longest-running Singapore food franchise. With the bakery outlets located in major business, residential and shopping areas, drawing a diverse mix of culture and races to their choice bakery products. PrimaDeli has been managed by the Prima Food Pte Ltd, which is the subsidiary of food and service conglomerate Prima Limited.

Setbacks faced by Prima in the early years

Just coming into its first few years of operation, the company was already confronted with umpteen financial setbacks which include the struggle of regulating the continual fluctuations uh their profit margins. In their yearly report for 1970, Prima addressed the problem of rapid increase of production costs particularly the vital raw products of wheat grain and also for the logistics of freight transportation costs. Due to the hike of price in production costs, the company had no other choice but to sell their goods and their by-products at higher cost in order to restore their lost and to ensure that their profit margin is maintained.

What was done to counter back the problem

Due to their concern over production costs, Prima subsequently felt encouraged to purchase majority share-holds in multiple primary industries and firms. The company took a majority stake in Prima Modern Machinery Pte Ltd in 1990 and took over the businesses of Goodman Fielder Wattie (Asia) Pte Ltd, a company that specialises in food and beverage area. These achievements have allowed Prima to widen their portfolio of long-term investment and consequently contributed to the cutback of production costs induced by the company.

To further counteract the extreme price increase in market productions, Prima began specializing in export sales within the year itself. These measures paid off munificently allowing the company to restore its lost and claiming a profit of up to S$2.736 million for 1991 as to comparison to the loss attained in the previous year that came up to S$5.124 million.

Achievements

Over the years, Prima Limited had successfully grabbed a few awards to bring up its name. Some of these awards are Hazard Analysis Critical Control Point (HACCP) and Singapore Franchise Mark.

HACCP which is the Hazard Analysis Critical Control Point is a systematic and scientific approach in indentifying, processing, production and preparation of food so as to ensure that the food is safe when consumed.

By attaining the HACCP award, it shows that Prima Food has a system which is universally recognised. This is especially helpful in allowing PrimaDeli to compete more effectively in the world market and it also open potential markets by increasing confidence in Prima’s food safety and hygiene standards.

With the Singapore Franchise Mark award in hand, it goes to show that Prima is certified for having creditable professional standards in the sectors of business practices, management capabilities as well as business performance. This certainly puts Prima in a advantageous position because on the few top selected companies are rewarded with this award. By being listed as one of the companies, it just goes to show that Prima is one of the few top notch companies in terms of franchising management. Currently, all PrimaDeli retail outlets operate under the franchise system. What this system does is providing franchisees with premium quality products as well as a broad scope of professional training and help that includes outlet concept development and marketing. With this, the system allows for the franchisor to focus on food manufacturing, research and development while partnering like-minded entrepreneurs to operate the retail front. In which, it assures a steady business growth. PrimaDeli has also received awards including Franchise Excellence Awards Mark in recognition for its successful franchise system.

In 2002, Prima Limited picked up the Superbrand status in a celebration of its corporate longevity and significant contribution to the Singapore economy. This was followed by the 2004 SPBA Heritage Brand Award which recognises the company’s market excellence over 40 years. By attaining this award, PrimaDeli is recognised to be one of the top brands in Singapore for market dominance, goodwill, customer loyalty and overall market acceptance.

Recent years

In 17 may 2007, PrimaDeli being the first home-grown bakery franchise and the longest running Singapore food franchise, has received the Halal food certification from MUIS, the Islamic Religious Council of Singapore – a first for an established Singapore bakery franchise. It is after 15 years, that PrimaDeli finally decided it’s time to tap into the halal market and increase its customer base. With the Halal certification, PrimaDeli is now able extend its wide range of freshly-baked

pastries, buns, breads and premium quality cakes to the Muslim community at 38 retail outlets islandwide. The Halal certification provides assurance to the Muslim community that the food does not contain any ingredients which they are forbidden to consume, such as alcohol, pork and other meat that have not been prepared according to Islamic rituals. With the Halal certificate in hand, has certainly put PrimaDeli in an advantageous position.

Unfortunately, on 19 November of the same year, Prima Limited was confronted with one of its biggest challenges to date. Which is a virulent case of salmonella poisoning that caused all 38 Prima Deli outlets to be closed for a period of up to 3 weeks. The company was fined the maximum of S$5000 for selling contaminated food and for causing more than 200 of its customers to fall ill after consuming cakes purchased from Prima Deli stores. Sales drastically dropped to 15% in the immediate aftermath of the health scare, but were declared to be not as dire as the company had estimated. As a matter of fact, customers eventually returned back to the stores, and the company’s overall sales actually rose 10% to 15% higher than their usual records during previous business years. Many new rules and regulations were implemented as a direct result of this case of salmonella poisoning, with all employees now required to undergo not just routine health checks, but also screening for salmonella. The company also implanted more cameras in production areas in order to monitor hygiene more effectively.

Company’s subsidiaries

After looking at the organization’s history and the numerous challenges that it faced, let’s now look at how the company diversifies its services, not just in terms of producing quality baked products but also in cafeteria operations, fine dining and casual dining. Apart from food beverages, Prima is also into the field of information technology to further increase their profits and make use of it to full benefit.

In this section, a list of subsidiaries will be given just to show how Prima Limited has succeeded in expanding their company.

List of subsidiaries under Prima Limited

Prima Food Pte Ltd

-PrimaDeli Asia (M) Sdn Bhd

-Confectionery Transformation (M) Sdn Bhd

– PrimaDeli Franchise (M) Sdn Bhd

PFS Pte Ltd

– Prima Noodle Restaurant Pte Ltd

PrimaDeli’s Vision and Mission

The following was extracted from http://www.prima.com.sg/core_biz/Frameset/index_foodsvs_manu.htm

http://infopedia.nl.sg/articles/SIP_1458_2009-02-11.html

Prima is also known as “Bai Ling Mai” in Chinese, which means “a hundred year old wheat”. It is used to represent the company’s vision of corporate longevity.

‘PrimaDeli is Singapore’s first homegrown bakery and confectionery franchise. It was launched in 1992 with the mission to transform the local bakery and confectionery industry by adopting modern production and management techniques, information technology and strong branding.’

From here, it can be seen that PrimaDeli is living up to its vision of longevity of the company by inducing new ways to prosper their business live attaining a Halal certificate so as to broaden their range of customer in terms of race. Also they are always coming up with different ways to further improve their baking solutions through technology.

An In-Depth Look

External environment of the company

Here we’re going to look at the competition that PrimaDeli faces against other confectionary shops. The figure below shows which 2 confectionaries customers prefer to than PrimaDeli. These percentages were base on a survey which I have done.

Confectionary shop: Percentage (%)

Polar puffs & cakes 81.8

Bengawan Solo 4.5

Breadtalk 31.8

From here, it could be seen that clearly there’s a huge percentage of people which will turn to Polar puffs & cakes other than PrimaDeli. There’s a very fierce competition going on between these two popular shops.

Let’s now look at what consumer’s feel PrimaDeli should improve on. Again these figures are base on the response I’ve gotten from my survey.

Percentage(%)

More variety in choice of pastries, puffs, cakes, etc

60

Reduction in price

10

Customer service

20

Cleanliness

10

This clearly shows that customers want PrimaDeli to provide more variety of their pastries because they want to see something new, innovative and capture their eyes and taste.

Task Environmental Analysis

Threat of new entrants is High

There are more and more confectionaries sprouting

They are mostly located in heartlandsHaving analyzed the potential external threats, it is time to look at the factors directly contributing to a tight competition among confectionaries in Singapore a Porter’s Five diagram.

Bargaining power of buyers is High

There’s a vast choice of confectionaries to choose from

So, consumer will choose the ones that are cheap & has a wide variety of pastries

The consumers are the ones that will decide which bakery is the best

Supplier Power is average

Different confectionaries has different suppliers

The quality of products depends on the suppliers

There are still a wide range of suppliers to choose from

Rivalry is Intense

Number of confectionaries in Singapore is high

There is an increasing number of pastry shops coming up with new ways to attract consumer’s attraction ;promotions

Product and Technology Development is medium

With the constant upgrade of technology, some confectionaries are using this to their benefit

This aspect can be used to improve in their food quality

Internal Environment

Management

Here I’m going to do a marketing mix to compare both PrimaDeli and Polar.

PrimaDeli

Product

The main product for PrimaDeli is a range of top quality pastries, buns, breads and cakes.

Price

The range of prices varies depends on the type of confectionary that you’re buying.

For cakes it starts from $15 and can reach up to $45++ according to the flavour and weight of cake.

Outlets

Up to date there are 38 outlets in Singapore

Polar

Product

They specialises in mostly puffs and cakes

Price

Pricing varies to the products bought

Cakes starts from $10.80 – $45++

Outlets

As of now, there are 33 outlets and 70 takeaway counters at petrol stations

Observations and Conclusions

Critical success factors

To determine the critical success factors of PrimaDeli we’ll have to once again look at PrimaDeli’s mission.

Mission

To transform the local bakery and confectionery industry by adopting modern production and management techniques, information technology and strong branding

Critical success factors

They should put in place their management techniques by producing and thinking of ways to further improve on their variety of confectionaries

In order to have a strong branding, they should think of new modern production ways to market their products

They should also keep up with the market competition and open up more outlets

Strategic problem

PrimaDeli should start considering in increasing the variation of their pastries because with more pastry shops coming up, they will lose out if they don’t change their strategies in pulling in more customers. Also, they will need to have more outlets in order to compete with the various confectionaries out there.

Strategic Alternatives and Recommendations

PrimaDeli has been doing really well in terms of their diversification in other aspects other than just in selling pastries, like franchising into other countries. However, in the area of marketing of their confectionaries here, they are a bit lacking in putting in more concern.

They should come out with different strategies and market plans to pull in customers to boost their income. Although being the first home-grown bakery franchise and the longest running Singapore food franchise, they still have a chance to lose their customers to other shops. For example, Polar puffs & cakes. Polar is now gaining a lot of attention and popularity from consumers because they feel that there are more varieties there rather than in PrimaDeli. With the numerous promotions that Polar has and also considering the number outlets it has as compared to PrimaDeli, it’s only a matter of time before PrimaDeli will lose out their customers.

Conclusion

In all, PrimaDeli has done Singapore proud by being one of the longest running Singapore food franchise and also first home-grown bakery franchise. It has venture out into other countries and gained the trust of other companies to purchase and use their products. This is something that not many local companies have been able to done. PrimaDeli also have proven that their standards are recognised world-wide and so are their food beverages.

However, PrimaDeli just have to step it up and be in pace with the current market. This is to ensure that they won’t fall behind.

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